Can I get a mortgage with no accounts?
While it’s generally a requirement for the self-employed to have a minimum of two or three years of trading history before being able to secure a mortgage, it is possible to obtain a mortgage with just one year of accounts, and in some cases, even without any accounts.
However, it’s important to note that options for obtaining a mortgage without any accounts are very limited and having at least one year of accounts will open up more options. In this guide, we will explore the available options for obtaining a mortgage without any accounts.
How do I secure a mortgage with no accounts?
If you’re looking to obtain a mortgage without any accounts, there are a few steps you can take to increase your chances of success:
- Get your documents in order: Gather any documentation you have that can demonstrate your income and track record, such as invoices, receipts, and bank statements. This will help you to build a picture of your earnings and expenditure.
- Get accountant projections: If you have an accountant, ask them to provide you with projections of your future earnings. This can help lenders to assess your affordability and determine whether you’re likely to be able to make your mortgage repayments.
- Evidence of forward dated contracts: If you have any forward dated contracts, gather evidence of these as they can demonstrate your future earnings potential.
- Evidence of your track history: If you’ve been working in the same field for a number of years, gather evidence of your track history, such as client testimonials or references.
- Get a specialist mortgage broker: It can be helpful to work with a specialist mortgage broker who has experience working with self-employed individuals without accounts. They can help you to navigate the application process and find lenders who are more likely to consider your application.
In what circumstances can I get a mortgage with no accounts?
Here’s a few scenarios where you may be able to get a mortgage without accounts:
- Switching from employed to self-employed: Switching from employed to self-employed in the same line of work can open up options with no accounts as lenders will usually look for a track history in the same line of work. Positive accountant projections can also help to demonstrate your earnings potential.
- CIS (Construction Industry Scheme) CIS workers can get a mortgage based on as little as 3 months’ pay, as long as they have been registered with the scheme for at least 12 months.
- Contract workers: Self-employed contractor workers may be able to borrow based on their annualised contract value, rather than their self-employed income, and can potentially get a mortgage with less than 1 year of accounts.
- You own less than 25% of a business: If you’re self-employed but own less than 20-25% of a company, you may be able to be treated as employed and not require accounts
It’s worth noting that each lender has their own criteria and requirements, so it’s important to seek professional advice and work with a specialist mortgage broker who can help you navigate the process and find the right lender for your situation.
Why do mortgage lenders usually want to see accounts?
Mortgage lenders want to see accounts for self-employed applicants to assess their income stability and affordability. Self-employed income can fluctuate more than salaried income, so lenders want to see evidence of a consistent and regular income stream.
They also want to ensure that the applicant has sufficient income to afford the mortgage payments and any associated costs. The accounts provide a picture of the applicant’s financial situation, which helps the lender make an informed decision on whether to approve the mortgage application.
Do I need a bigger deposit?
Generally, having no accounts as a self-employed applicant may limit your options for obtaining a mortgage, but it doesn’t necessarily mean you need a bigger deposit.
The deposit required for a mortgage typically depends on various factors such as the lender’s specific requirements, your credit score, and the loan-to-value ratio (LTV). Having a larger deposit can sometimes help improve your chances of being approved for a mortgage, especially if you have limited accounts or a more complex financial situation.
Which lenders may consider a mortgage with no accounts?
Kensington and Accord are examples of lenders who may consider a mortgage application from someone who is self-employed and doesn’t have accounts yet, but can provide evidence of transitioning from employment to self-employment within the same line of work. However, this may be subject to specific criteria and eligibility requirements.
Should I wait until I have 1 or 2 years accounts?
It’s always worth exploring your options even if you have no accounts or only one year of accounts. While having at least one or two years of accounts can increase your options, it’s important to consider all available options and assess their costs and affordability to determine if they can enable you to purchase the property you require.